Re: I'm not sure another rate cut will do much
A quarter point cut would be of mostly psychological benefit, as a sign that the FED understood what was going on and was doing something about it.
If a half point cut were made, I think it would be enough to stimulate an immediate round of refinancings, which would result in a combination of one time expenditures, for those who increased the size of their mortgages, and long term liquidity added to the economy, for those who kept the same mortgage size but lowered their payments.
It would also be somewhat helpful to the stock market, since it would drive bond yields lower, making investors more comfortable with stock market returns, and more willing to hold stocks, dismal though stock market returns have been.
Real interest rates (nominal - inflation) are still pretty high, on a historical basis, especially for a recessionary period. A rate cut could be of some help.
PS - for a good time, visit the Intel thread, where they've convinced themselves that sealing a chip up in a little box reduces its internal temperature - apparently the Intel faithfull have decided that Newton got it wrong with his conservation of energy theory. |
